Business Perspectives on Emerging Markets 2012-2017

Business Perspectives on
Emerging Markets 2012-2017

Findings from global survey, June 2012

All Rights Reserved ©2012 www.globalintelligence.com

Business Perspectives on Emerging Markets 2012-2017
Why this study is important

Everyone is talking about Emerging Markets. But what is the reality behind the
scenes?

In April-May 2012, GIA sought to find out how global companies are thinking about
Emerging Markets. What do they view as success factors or threats? What mistakes
have been made, and should be avoided? Do companies have the information to
capture fast moving market opportunities?

This study is important. Half the respondents say at least 30% of their global revenues
Markko Vaarnas will come from Emerging Markets by 2017. As a market intelligence partner to
CEO companies around the world, we are positioned at the forefront of our clients’
Global Intelligence Alliance international plans, particularly for Emerging Markets. With this study, we share the
strategic ambitions, concerns and challenges facing companies in fast growing
markets. We trust this will prove enlightening for your Emerging Markets strategy.

I welcome you to share your thoughts with any of my colleagues, as our mission is to
help companies understand, compete and grow in global markets.

www.globalintelligence.com | info@globalintelligence.com

Executive Summary: Brazil, China and India dominate
Emerging Markets
Indonesia gaining as companies seek market share

Emerging Markets focus and expectations Motivations and concerns

•  Most companies define Emerging Markets as BRIC •  Most companies see a presence in Emerging
or BRIICS, or based on stage or growth of economic Markets as necessary to their future success, and
development, but other factors such as market size, are investing now to gain a foothold and build
location and industry-specific opportunities come into global market share.
play when prioritizing countries.
•  It has become less about lower production costs,
•  BRIC countries are still seen as the top four though this is still a driver for some.
Emerging Markets for 2012-2017. Interest in Russia
is lagging behind the other three countries. •  Almost all companies (91%) say they could have
done something better in their Emerging Market
•  Most of the non-BRIC Emerging Markets that strategy.
international companies plan to target in 2012-2017
are in Asia or Latin America. Indonesia is the next •  The main regrets are not adapting more to local
upcoming Emerging Market, with over a quarter of conditions, not entering sooner and not acquiring
companies naming it fifth after the BRICs. South better market intelligence.
Africa, Vietnam, Mexico and Turkey follow.
•  Over half say that information on Emerging
•  Asian, European and Latin American companies are Markets is not readily available in their
all bullish about expected revenues from organizations, with three out of four doubting the
Emerging Markets (38%, 37% and 36% of total accuracy and completeness of the information that
revenues by 2017, respectively), followed by US they do have.
companies (34%).
www.globalintelligence.com 3

How can global companies succeed
in Emerging Markets in 2012-2017?

www.globalintelligence.com

430 managers told us what drives their strategy
How do companies perceive Emerging Markets; what are their plans; what do they want to achieve?

•  In April-May 2012, GIA conducted an online survey amongst business managers at 431 large and mid-sized
companies around the world.

•  We asked them questions such as:
•  How do you define Emerging Markets in your company?
•  Which are the top Emerging Markets for your industry over the next five years?
•  What key factors will determine whether foreign companies succeed in Emerging Markets?
•  What are the biggest threats to succeeding in Emerging Markets?
•  What are your company’s main reasons for investing in Emerging Markets?
•  What share of your company’s global revenue do you expect to come from Emerging Markets?
•  Which one aspect of your Emerging Markets strategy would you go back and change if you could?

•  The respondents’ job functions included strategic planning/business development (26%), market/competitive
intelligence (23%), senior management (19%), sales and marketing (13%), research and development/product
management (9%), among others.

•  Nearly half (42%) of the companies in the survey earned more than $1.3 billion (1 billion Euro) in annual revenue
and more than 50% (58%) have more than 1,000 employees.

•  See Appendix for more details about the survey sample.


10 industries are represented in this report
The industries are represented by the following symbols

•  Manufacturing & Industrial

•  Telecommunication, Technology & Media

•  Professional & Business Services

•  Financial Services

•  Consumer & Retail

•  Pharmaceuticals & Healthcare

•  Energy, Resources & Environment

•  Automotive

•  Chemicals

•  Logistics & Transportation


This study also helped people living in Emerging Markets
Donations from this study went to four charities assisting poor communities in Emerging Markets

•  GIA took the opportunity to donate $6.50 / 5 Euros for every completed survey response.

•  The total donation came close to $2,800 / 2,200 Euros, distributed across the following local charities:

•  Cambodia: Tabitha (NGO that runs self-help programs •  Russia: Gift of Life/Podari Zhizn (charity that funds
on personal and financial development for the poorest vital medicine for leukemia treatment and searches for
people) potential bone marrow donors for children)

•  Brazil: VidaBela (NGO that awards university •  South Africa: CANSA (NGO that provides holistic
scholarships to talented candidates from highly cancer care and support to those affected by the
disadvantaged socio-economic backgrounds) disease)


Emerging Markets focus to 2017



Most companies think of Emerging Markets as BRIC,
BRIICS, or based on stage of economic development
Market growth rate is also important and a quarter of companies classify by region

How Global Companies Define Emerging Markets

Stage of economic development 39%

Market growth rate 31%

BRIC (Brazil, Russia, India, China) 28%
55% BRIC or BRIICS
BRIICS (BRIC, Indonesia, S. Africa) 27%

By geography (eg. in region X) 23%

Penetration level of product/service 20%

Market not in US, W. Europe, Japan 16%

Penetration level by my company 10%

Penetration level by multinationals 8%

Proprietary listings eg. FTSE, S&P 3%

Question: How do you define Emerging Markets in your company? N=411.

Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. Respondents were allowed to select more than one.


Emerging Markets in Asia and Latin America are
generating the most interest
Russia, South Africa and Turkey are the other top targets for the next five years

Top 10 Emerging Markets (2012-2017) by % all companies

Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? N=427.

Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey.


Brazil, China and India seen as equally important in
the next five years
Russia is also still significant but the level of interest is well behind the top three

Top Four Emerging Markets (2012-2017) •  Brazil, Russia, India and China are still the top
four most important Emerging Markets for
2012-2017.

India 66.4% •  Russia is least favored amongst the BRIC
countries, with the majority (~65%) focusing
more on India, Brazil and China with equal
Brazil 65.7% levels of interest.

•  According to the IMF, average GDP growth
China 65.4% rates for 2012-2017* will be 7.4% for India,
3.7% for Brazil, 8.5% for China and 3.9% for
Russia.
Russia 39.7%
•  Brazil and Russia seem to be finding favor for
reasons other than their growth rates, such as
their potentially huge domestic markets, natural
Question: Which are the top 5 Emerging Markets for your industry resources and dominance within their regions.
over the next 5 years? N=427.

* Figures based on 2012, 2013 and 2017 average from IMF World Economy Outlook: Growth Resuming, Dangers Remain 11


European companies are prioritizing Asia and Latin
America despite their proximity to Russia
Latin American companies are less adventurous when it comes to looking outside their home region

Top Four Emerging Markets by Location of Headquarters (2012-2017)

22%
13%
Asian headquarters
32%
33%
40%
15%
Latin American headquarters
24%
21%
28%
Brazil
19%
European headquarters Russia
25%
28% India
28% China
17%
US headquarters
29%
26%

Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? (To 2017) N=395 (Total): N=95 (US),
N=161(Europe), N=44 (Latin America), N=95 (Asia).



China’s economy outweighs the other BRIC countries
but Brazil and Russia have highest GDP per capita
Different BRIC countries are attracting interest and investment for different reasons

Brazil India China Russia

Population
205.72 1,205.10 1,343.24 138.08
Persons (millions)

GDP
2,518 1,843 6,989 1,791
USD (Billions)

GDP (PPP) per Capita
11,600 3,700 8,400 16,700
Current international dollar

8.2%
6.9%
3.0%
GDP growth rate 2012 (e) 4.0%

Land
8,514,877 3,287,263 9,596,961 17,098,242
Km2

Source: Global Intelligence Alliance; IMF; CIA


China is the easiest to do business in and Brazil is
becoming more competitive in the global context
Levels of development and the opportunities vary across the different BRIC countries

Brazil India China Russia

Mobile subscribers
Q1, 2012
250 million 919 million 1.01 billion 227 million

126% 160%
Teledensity (wireless) 76% 74%
Q1, 2012

No. of millionaire
households 303 286 1,312 375
2011, thousands

Ease of doing business
Index (World Bank) 126 132 91 120
2011, ranking

53 51 26 63
Global Competitiveness
Index (WEO)
2010/11 to 2011/12, ranking 58 56 27 66

Source: Global Intelligence Alliance; MIIT China, TRAI India, Anatel Brazil, Deloitte


China, India and Brazil look good to most industry
sectors; Russia has less widespread appeal
Healthcare sector is least positive on China, Automotive on India, Energy & Resources on Brazil, and
Consumer & Retail on Russia

Top Four Emerging Markets by Industry (2012-2017)

27% 28% 27% 29% 25% 27% 26% 29%
30% 31%

15% 13% 12% 17% 16%
19% 16% 21%
21% 21% Brazil
Russia
30% 29% 29%
27% 32% 28% 23% 31% India
21%
24%
China

27% 26% 30% 30% 29% 29% 27% 29%
25% 24%

Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? (To 2017) N=427.



Second tier Emerging Markets span the globe, led by
Indonesia and South Africa
No Middle Eastern countries named amongst top 10 Emerging Markets in the next 5 years after BRIC

Top 10 Emerging Markets after BRICs (2012-2017) •  Half of the 10 non-BRIC Emerging Markets that
Rank Country % international companies plan to target in
2012-2017 are in Asia or Latin America.
5 Indonesia 27.4%
6 South Africa 22.2% •  Indonesia is the next upcoming Emerging
7 Vietnam Market, with over a quarter of companies
20.1%
naming it fifth after the BRICs.
8 Mexico 18.5%
9 Turkey 17.8% •  South Africa, Vietnam, Mexico and Turkey
10 Argentina follow with approximately one fifth of
10.3%
companies including one of them in their top
11 Chile 9.6% five.
12 Thailand 9.6%
13 Malaysia •  Turkey is the only country in Europe to make it
8.7%
into the top 10 Emerging Markets after BRIC.
14 South Korea 8.7%
Africa Asia Europe Latin America
Question: Which are the top 5 Emerging Markets for your industry
over the next 5 years (to 2017)? N=427
Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. 16


After Indonesia and South Africa, Turkey and Mexico
interest US and European companies most
Latin American companies focus more on their own home region; Asian companies favor Vietnam

Top 10 Secondary Emerging Markets by Location of Headquarters (2012-2017)
1%

4% 7% 4% 8%
6%
6% 6% Malaysia
6% 3% 20% 3%
5% 7% South Korea
10%
10% 4% 1%
2% Chile
6%
17% 20% Thailand
14% 6%
Argentina
10% 7%
15% 22%
Turkey
11%
10% Mexico
29% 11%
17% Vietnam
15%
3% South Africa
26%
15% 18% 11% Indonesia
4%
US HQ European HQ Latin American HQ Asian HQ
Question: Which are the top 5 Emerging Markets for your industry over the next 5 years (to 2017)? N=395; N=95 (US); N=161 (Europe); N=44 (Latin
America); N=95 (Asia).



Vietnam stands out for Consumer, Logistics and
Resources sectors, Mexico for Healthcare
Chemical sector very focused on Indonesia and South Africa, Consumer & Retail on SE Asia

Top 10 Secondary Emerging Markets by industry (2012-2017)
5% 2% 6% 4% 4% 6% 5% 4%
6% 10% 7%
3% 1% 6% 5% 4%
6% 9% 12% 4% 6%
8% 3% 6% 5% 8%
4% 2% 6% 8% 9% 5%
5% 8% 8% South Korea
5% 9% 6%
8% 6% 8% 14%
3% 14% 6% Malaysia
14% 8% 6% 3% 3% 4%
8% 6% 8% Thailand
12% 11%
10% 16% 14%
10% 17% 12% 8% Chile
15%
10% 12% 4% Argentina
14% 13%
14% Turkey
7% 18%
15% 20% 27% 21%
20% 6% Mexico
14%
18% 20% Vietnam
15% 3% 19%
6% 18% 8%
12% South Africa
14%
27% Indonesia
21% 18% 20% 21% 21%
16% 12% 16% 16%

Question: Which are the top 5 Emerging Markets for your industry over the next 5 years (TO 2017)? N=427


Emerging Markets aspirations to 2017



Most companies are investing to establish a presence
in future major markets for long term gain
Less than one fifth look to Emerging Markets as a low cost supply base

Motivations for investing in Emerging Markets •  The aim behind global companies’ 2012-2017
emerging markets strategy is to build markets
70 70% Gain foothold for long term success in
large future market
and gain global market share – it is now less
about capturing lower production costs (17%).
60
•  Most companies want to gain a foothold for
long term success. Half are looking for greater
50 51% Gain global market share
global market share.

40 •  Four out of ten have followed their customers
39% Our customers are there
to Emerging Markets.
34% Lack of growth/profit in established markets
30 •  A third are being pushed into Emerging
25% Diversify risks
24% Tap into short/medium term growth/profit
Markets by lack of growth or profit in more
20 established markets.
17% Establish low cost supply base
•  A quarter are going into Emerging Markets to
10 14% CEO/board directive / Competitors are there
diversify risks, and the same number to tap into
Question: What are the main reasons for investing in Emerging Markets short to medium term profits and growth.
for your company? N=428.
Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. 20
Respondents were allowed to select more than one.


Half of the companies say at least 30% of global
revenues will come from Emerging Markets by 2017
One fifth say Emerging Markets will account for 50% of revenues within five years

% Global Revenue from Emerging Markets (2012-2017)
Zero revenue from
Emerging Markets
1% (2012-2017)

2012 53% 18% 14% 7% 3% 4% 7%

2014 29% 23% 22% 14% 3% 5% 4% 1%

2017 15% 19% 15% 31% 7% 8% 5% 1%

0%-10% 11%-20% 21%-30% 31%-50% 51%-60% 61%-80% 81%-100%

Question: What % of your company's global revenue do you expect to come from Emerging Markets? N=277 (2012), N=268 (2014), N=263 (2017).



Technology sector expects the most growth in
Emerging Markets, followed by Logistics and Chemical
The Resources sector will source the most revenue from Emerging markets; Consumer, Finance and
Healthcare the least

% Average Global Revenue from Emerging Markets by Industry (2012-2017)
41%
30%
24%
48%
32%
20%
37%
27%
18% 2017
27% 2014
19%
13%
28% 2012
21%
15%
26%
18%
15%
53%
45%
35%
37%
25%
19%
38%
29%
19%
36%
24%
17%
Question: What share of your company's global revenue do you expect to come from Emerging Markets? N=277 (2012), N=268 (2014), N=263 (2017).

Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017


US companies are slightly behind the curve on tapping
into Emerging Markets revenues
Smaller companies are expecting a greater share of revenue from Emerging Markets than larger ones

% Average Expected Global Revenue from Emerging Markets (2017)

By size of annual revenue By location of headquarters

Asian HQ 38%
<0.1 bil Euro 42%

European HQ 37%

0.1 bil - < 1bil Euro 38%

Latin American HQ 36%

=/> 1bil Euro 33%
US HQ 34%

Question: What share of your company's global revenue do you Question: What share of your company's global revenue do you expect
expect to come from Emerging Markets? N=256 (Total of 2017): to come from Emerging Markets? N=245 (Total of 2017): N=63 (US),
N=86(<0.1 bil Euro), N=62 (0.1 bil-<1 bil Euro), N=108 (=/>1 bil Euro). N=94 (Europe), N=27 (Latin America), N=61 (Asia).
.
Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017

For the rest of this free report and
more like it, please visit

http://bit.ly/GIA2012


GIA is a strategic market intelligence and advisory group

Global Intelligence Alliance (GIA) is the preferred
partner for organizations seeking to understand,
compete and grow in international markets.

Our industry expertise and coverage of over 100
countries enables our customers to make better
informed decisions worldwide.

GIA Group has 11 offices on 4 continents.
Together with affiliated GIA Member companies,
certified GIA Research Partners and consultants,
GIA provides access to local knowledge in over
100 countries.

All GIA Network companies adhere to GIA’s Research and Analysis Quality System as well as the SCIP
Code of Ethics.

www.globalintelligence.com | info@globalintelligence.com


We help you make better informed decisions

Customized market monitoring solution to boost
awareness and collaboration in your organization

Analytical insight and advisory, enabling you to compete
more effectively and grow into new opportunities

Valuable information about your markets and industry,
on-demand around the world

High-quality intelligence software that enables full control
of the intelligence process

A suite of consulting services, events and online
resources that help you set up and develop world class
intelligence programs


International Global Intelligence Alliance Group info@globalintelligence.com
Brazil Global Intelligence Alliance Latin America brazil@globalintelligence.com
Canada Global Intelligence Alliance Canada canada@globalintelligence.com
Czech Republic EasyLink Business Services cee@globalintelligence.com
China Global Intelligence Alliance China china@globalintelligence.com
Finland Global Intelligence Alliance Finland finland@globalintelligence.com
France RV Conseil france@globalintelligence.com
Germany Global Intelligence Alliance Germany germany@globalintelligence.com
Hong Kong Global Intelligence Alliance Hong Kong hongkong@globalintelligence.com
India Global Intelligence Alliance India india@globalintelligence.com
Japan McRBC japan@globalintelligence.com
Korea 3mecca korea@globalintelligence.com
Latvia Gateway Baltic baltics@globalintelligence.com
Mexico Americas Market Intelligence Mexico mexico@globalintelligence.com
Netherlands Global Intelligence Alliance Netherlands netherlands@globalintelligence.com
Portugal Growth Setting portugal@globalintelligence.com
Russia ALT R&C russia@globalintelligence.com
Singapore Global Intelligence Alliance Singapore singapore@globalintelligence.com
South Africa Butterfly Effect Intelligence southafrica@globalintelligence.com
Tunisia RV Conseil Tunisie tunisia@globalintelligence.com
UK Global Intelligence Alliance UK uk@globalintelligence.com
United Arab Emirates GCC Consulting uae@globalintelligence.com
USA East Coast Global Intelligence Alliance USA East Coast usaeast@globalintelligence.com
USA Florida Americas Market Intelligence Miami usaflorida@globalintelligence.com
USA Midwest Global Intelligence Alliance USA Midwest usamidwest@globalintelligence.com

Business Perspectives on Emerging Markets 2012-2017

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Viewers also liked

Viewers also liked (20)

Similar to Business Perspectives on Emerging Markets 2012-2017

Similar to Business Perspectives on Emerging Markets 2012-2017 (20)

More from M-Brain (previously Global Intelligence Alliance)

More from M-Brain (previously Global Intelligence Alliance) (11)

Recently uploaded

Recently uploaded (20)

Business Perspectives on Emerging Markets 2012-2017